Advertising giant WPP has reported a hefty drop in annual profit and warned that challenging conditions will persist into the first half of 2019.
The group posted a 30.6% decline in full-year pre-tax profit to £1.46 billion for 2018, while revenue fell 1.3% to £15.6 billion. Like-for-like sales dipped 0.4%.
WPP blamed the impact of restructuring and transformation costs, as well as a goodwill impairment.
The group is grappling with several big-name account losses, such as car giant Ford, which has dragged on its performance.
In October, shares in WPP collapsed when the firm trimmed full-year guidance, reported lower-than-expected third-quarter sales and confirmed that it wants to offload Kantar.
Chief executive Mark Read said: “As we have said previously, 2019 will be challenging – particularly in the first half – due to headwinds from client losses in 2018.
“However, we start the year with fewer clients under review than we did in 2018, and investments in creativity and technology will further improve the competitiveness of our offer.”
WPP is also in the process of axing 3,500 jobs worldwide under plans to slash costs by £275 million a year as it looks to turn around its fortunes.
WPP, which was rocked by the sudden departure last year of founder and chief executive Sir Martin Sorrell, plans to shed under-performing parts of the business and make itself leaner.
Total restructuring and transformation costs in 2018 came in at £302 million.
The firm said it is performing strongly in Europe, Asia, Latin America and the Middle East, adding that it is addressing issues in the US.
WPP shares were up over 8% in morning trade at 894p.
George Salmon, equity analyst at Hargreaves Lansdown, said: “Stronger momentum in Europe and emerging markets provide some welcome relief after a torrid 2018.
“WPP is undergoing a transformation that’ll hopefully see it shed significant levels of debt, and dispose of several non-core divisions, meaning it emerges as a simpler business with a stronger balance sheet.
“The light at the end of the tunnel is getting nearer, but with 2019 set to be impacted by continued weakness in the key US market, revenue and margin trends could well get worse before they get better.”